As Grocery Outlet Holding Corp. GO prepares to announce its fourth-quarter fiscal 2024 earnings results on Feb. 25 after the market closes, investors are closely watching to see how the company has performed amid challenges and growth opportunities in the competitive grocery sector.

The Zacks Consensus Estimate for revenues is pegged at $1,086 million, suggesting a solid 9.7% improvement over the prior-year period’s actual. However, the company’s bottom line is expected to face pressure. The Zacks Consensus Estimate for earnings per share has been stable over the past 30 days at 17 cents, indicating a year-over-year decline of 5.6%.

Grocery Outlet has a trailing four-quarter negative earnings surprise of 2.2%, on average. In the last reported quarter, this Emeryville, CA-based company’s bottom line outperformed the Zacks Consensus Estimate by a margin of 3.7%.

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Key Factors to Observe for Grocery Outlet's Q4 Earnings

Grocery Outlet’s emphasis on opportunistic purchasing, targeted marketing, store expansion and e-commerce initiatives are likely to have contributed to top-line growth. The rollout of a personalization app, along with an expanded product assortment featuring new branded and private-label items, is likely to have strengthened customer engagement and increased shopping frequency. We expect comps growth to accelerate to 2% in the final quarter from 1.2% in the third quarter. 

The company has been steadily ramping up customer engagement through technology and personalization. Its mobile app has gained significant traction, allowing customers to receive personalized deals and early access to promotions. By offering a range of affordable, quality products under its label, Grocery Outlet differentiates itself in a competitive market. 

We note that Grocery Outlet has largely overcome the financial impacts of its system transition, but any lingering challenges could have hindered margin expansion and operational scalability. Moreover, any deleverage in SG&A expenses is likely to have exerted pressure on profitability. We anticipate SG&A expenses to increase 8.7% in the fourth quarter.

What the Zacks Model Predicts for GO

As investors prepare for Grocery Outlet's fourth-quarter results, the question looms regarding earnings beat or miss. Our proven model predicts an earnings beat for Grocery Outlet this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.

Grocery Outlet has a Zacks Rank #3 and an Earnings ESP of +1.32%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks With the Favorable Combination

Here are three more companies you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat this season:

Costco Wholesale Corporation COST currently has an Earnings ESP of +0.14% and a Zacks Rank #2. The Zacks Consensus Estimate for second-quarter fiscal 2025 earnings per share is pegged at $4.09, suggesting 10.2% year-over-year growth. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco’s top line is expected to ascend year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $63.2 billion, which indicates an increase of 8.2% from the figure reported in the prior-year quarter. COST has a trailing four-quarter earnings surprise of 2%, on average.

Sprouts Farmers Market, Inc. SFM currently has an Earnings ESP of +4.57% and a Zacks Rank #2. The Zacks Consensus Estimate for first-quarter 2025 earnings per share is pegged at $1.46, suggesting 30.4% year-over-year growth. 

Sprouts Farmers’ top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $2.12 billion, which indicates an increase of 12.6% from the figure reported in the prior-year quarter. SFM has a trailing four-quarter earnings surprise of 15.1%, on average.

Jack in the Box Inc. JACK presently has an Earnings ESP of +0.43% and a Zacks Rank of 3. The company is likely to register a top-line decline when it reports first-quarter fiscal 2025 results. The Zacks Consensus Estimate for JACK’s quarterly revenues is pegged at $470.4 million, which indicates a dip of 3.5% from the figure reported in the prior-year quarter.

The consensus estimate for Jack in the Box’s quarterly earnings has declined by 4 cents over the past 30 days to $1.71 per share. The figure indicates a decrease of 12.3% from the year-ago quarter’s number. JACK delivered an average earnings surprise of 4.2% in the trailing four quarters.

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Janus Henderson Sustainable & Impact Core Bond ETF (JACK) : Free Stock Analysis Report

Costco Wholesale Corporation (COST) : Free Stock Analysis Report

Sprouts Farmers Market, Inc. (SFM) : Free Stock Analysis Report

Grocery Outlet Holding Corp. (GO) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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